The Motley Fool

ASX stock of the day: LiveTiles share price surges 14% after small cap tech share reports 60% jump in recurring revenue

The LiveTiles Ltd (ASX: LVT) share price soared as much as 14% this morning after the intranet software provider revealed growing revenues. LiveTiles’ annualised recurring revenue reached $55.2 million in the March quarter, up from $52.7 million in the December quarter. 

Growing recurring revenues

Annualised recurring revenue has grown 60% in the last year and is up 4.9x in 2 years. Total customer cash receipts rose to $10.9 million in the March quarter, up 109% on the prior corresponding period (pcp). 

Customer numbers grew to 1,068 at 31 March from 1,031 at 31 December. Average annual recurring revenue per customer is over $51,500, reflecting growth of 31% on the pcp. 

Underlying operating expenses of $19.4 million were higher than the $18.6 million guidance. Operating expenses would, however, have been below guidance were it not for the impact of unfavourable foreign exchange movements. 

LiveTiles’ business

LiveTiles supplies tools to create dashboards, employee portals, and corporate intranets. Headquartered in New York, LiveTiles has operations across the US, Europe, and Australia. LiveTiles shares are up more than 100% from March lows as the increase in remote working promotes interest in its products. 

As a provider of intranet software, LiveTiles is well-positioned in the current environment. Its software is highly applicable to remote working. The company is working with 1,000 customers to support remote employee communications, operating system access, collaboration, and document sharing. 

LiveTiles software supports organisations and employees to access company information and systems from wherever they are. LiveTiles products can be accessed via internet browser, mobile apps, and within Microsoft Teams.

Microsoft Teams is a collaboration platform and the fastest-growing application in Microsoft’s history. In recent weeks, growth in the use of Microsoft Teams has accelerated further, with daily active users exceeding 44 million on 18 March, up from 32 million on 11 March. 

During the March quarter, LiveTiles continued to see strong interest from current and future customers. Sales teams and partners, including Microsoft, have seen a significant uplift in pipeline and activity around remote working products. LiveTiles expects customer interest in its offering to accelerate growth over the medium term. 

Outlook

LiveTiles is accelerating its efforts to reach breakeven operating cash flow and expects to reach this point in calendar 2020. Material cost reductions were implemented in late March and early April. LiveTiles has confirmed it has no requirement to raise further capital to support operating cash burn.  

LiveTiles had cash on hand of $33.8 million at 31 March, and today received $5.6 million cash in relation to R&D tax refunds from the Australian Tax Office. Its key objective is to reach a run rate of operating cashflow breakeven in 2020.

CEO Karl Redenbach said, “LiveTiles products are a leader in ‘work from home’ tools. Recent difficult events have thrown into sharp focus for customers the importance of cloud-based tools that can be accessed by all employees anywhere.”

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has recommended LIVETILES FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Related Articles...

Kate O'Brien